Selling the Fourth Estate to the Highest Bidder

BY EMILIO BRUNA AND JACK PRICE

It seemed odd that, at the time of the holiday season announcement, no one around here knew much about the obscure Daytona Beach firm, Halifax Media Holdings, LLC, that purchased the Gainesville Sun and 15 other papers (including the Sarasota Herald-Tribune and the Lakeland Ledger) from the New York Times.

The face, power and money behind the Halifax Media Group is arch conservative Arkansas billionaire, Warren Stephens, who, along with his brother and other family members, is believed to be worth up to $5 billion. And, as is the case with many “humble beginnings to extreme riches” stories in two generations, the family’s path to great wealth is littered with questionable actions, close calls and hardball politics.

A recent example: when Halifax bought these newspapers for $143 million, employees were given a “noncompete” agreement to sign, stating they could not work for other media companies within the following two years that were in a city with a another Halifax owned business. Yet, Halifax retained the right to fire them. Employees who didn’t sign were told they would lose their jobs. (Halifax dropped this requirement after the Poynter Institute and others questioned the legal and ethical ramifications.)

Another example: In Tampa, about 30 of former New York Times Regional Media Group employees were laid off, and given a severance only if they wouldn’t talk to the media about package details and would not make “disparaging” remarks about the company.

Family History

Warren Stevens’ uncle, W.R. “Witt” Stevens, founded The Stephens Group in 1933. His father, Jackson T. “Jack” Stephens joined the firm in 1946. Jack served as CEO until 1986, the year his son Warren took over the family investment banking and brokerage business, which still constitutes the bulk of their wealth.

In 2006, one year after Jack’s death, the family business was split (as reported by arkansasbusiness.com). Warren bought 100 percent of Stephens Inc. from the holding company, the Stephens Group.

His cousins, Witt Stephens, Jr. and Elizabeth Stephens Campbell, bought the Stephens Group Inc. name and formed a new entity to pursue private equity investments. The families remain 50-50 partners in the holding company, now renamed SH Corp. The family tradition of owning a multitude of corporate entities and employing layers of active and shell companies makes it difficult to find out the extent of their economic empire.

The Stephens family’s influence in Arkansas in business, finance and politics cannot be overstated. The Stephens Group managed the IPO for Sam Walton’s WalMart retail empire in 1970. They were early investors and advisors for Tyson Foods, Dillard’s Hunt Transportation and Alltel. But their reach extends beyond the Razorback state to the rest of the U.S.

“Witt” Stephens

Witt Stephens was born on Sept. 14, 1907, in Prattsville, Arkansas, the second of six children. His father, A.J. “Jack” Stephens, was a farmer and politician who served two terms in the state House of Representatives from Grant County, as would Witt 30 years later. Around age 20, Witt begin selling belt buckles and other jewelry for the National Crafts Company along with peddling Bibles on the side. An “extraordinary salesman,” he soon became regional manager for the company.

Witt returned to Arkansas about five years later and set up a partnership with W. H. Thurmond in Little Rock trading municipal bonds. Arkansas highway and road bonds, as well as school, levee and other improvement district bonds were in default during the Great Depression and were selling for as little as 10 cents on the dollar. Witt was confident that Franklin Roosevelt’s Reconstruction Finance Corporation would ensure that government bonds were redeemed, so he invested in them. His intuition paid off when he sold the bonds at a profit, accumulating a small fortune during one of the worst financial times in modern history. Ironically, the righteous decisions of the most liberal President of the United States assured the financial foundation for the right wing and conservative Stephens family.

Witt expanded the investment business and acquired major holdings in the gas and coal industries, railroads and gold mining while personally, along with family members, acquiring an interest in many small banks around the state, making it easier to market bonds and extend his influence.

In 1956, Witt became president and chairman of the board of Arkla, leaving the investment company in the hands of his brother, Jackson T. Stephens. After Witt’s retirement from Arkla, he returned to Stephens Inc. where he dabbled in bond trading and hosted locally famous “cornbread lunches,” at which former political and business adversaries, journalists and judges shed their old grudges and swapped stories of election hijinks and crafty business deals.

“Jack” Stephens

Jackson T. “Jack” Stephens, Witt’s younger brother, was born on August 9, 1923, in Prattsville. Jack attended Prattsville’s public schools and graduated from high school at Columbia Military Academy in Tennessee. He began college at the University of Arkansas and later received an appointment to the U.S. Naval Academy, graduating in 1947. One of Jack’s classmates at the Naval Academy was future president Jimmy Carter, who would receive strong support from Jack in later campaigns. Poor eyesight kept Jack from active duty in the Navy, but his brother offered him a job at what would become Stephens Inc., bringing Jack back to Arkansas.

Jack helped build the company into a diversified financial conglomerate, partnering with his brother to buy what would become Arkansas Oklahoma Gas Co. and the oil and gas exploration firm that became Stephens Production. A 1990 feature in Fortune magazine told of how the two brothers had “built their family business from a bucket-shop bond house into a full-fledged investment bank with $650 million in capital at its disposal, enough to rank it 13th among U.S. firms.” Jack also invested in a number of community banks around the state, culminating in the purchase of Little Rock’s Worthen Bank, ultimately sold to what is now Bank of America. His private investments were spectacularly successful, three of which generated more than $1 billion each in profits: Stephens Production Company, Systematics, and Donrey Media. Some of these banking and industrial investments were the subject of legal actions, political brouhaha, government scrutiny and public scorn.

Warren Stevens

Jack’s son, Warren, 54, took over Stephens Inc., and Jack became chairman of Stephens Group Inc. Warren Stephens, who received a bachelor’s degree from Washington and Lee University and a Master of Business Administration from Wake Forest University, joined Stephens, Inc. in 1981. In 1986, when Stephens Group Inc. was formed and became the parent company of Stephens Inc., Warren became its president after his father Jack stepped down as CEO.

In 2006, Warren acquired 100 percent of the outstanding shares. He also owns major stakes in Oklahoma Gas & Electric, Donrey Media Group (now Stephens Media Group), Alltel, Bank of America and others. As a Republican, he supported Bob Dole in 1996, Steve Forbes in 1999, and he has supported Mike Huckabee. He has been critical of Presidents Bill Clinton and Barack Obama.

As of September 2011, Warren was the 459th richest person in the world, and the 130th richest in the United States. By conservative estimates, he is worth $2.8 billion, perhaps more. And, unlike the philanthropic view of many of the ultra-rich, his father believed in leaving most of his fortune to his children saying, “I’d rather give my money to my kids than do anything else with it.”

Warren’s good fortune prompted him to state, “I feel I’ve got to make my mark equal or better than my father,” and he has.

Jackson Stephens, Jr.

Jackson T. Stephens, Jr., Warren’s brother, worked for his father’s business, Stephens, Inc., from 1973 to 1983 in its investment and merchant banking areas. He is now the Director and Chair at Club for Growth, an ultra-conservative political organization that supports right wing and Tea Party candidates for public office. He is also the Chairman and CEO of ExOxEmis, Inc., a private biotechnology firm. He has supported Tea Party extremists Jim DeMint, Marco Rubio and Sharron Angle. Unlike his brother, he had a long and adversarial relationship with former presidential contender Mike Huckabee.

The Stephens’ Business Empire

These four family members are the principal architects of a business empire that has grown to the top ranks in terms of wealth and power, while staying under the public radar. Their high level of success and power are indisputable. With so many different company entities in the Stephens family, keeping up with them and their activities is no simple task. The ownership is not shared equally among all family members in all the industries served, and a small number of minority owners exist, whose permanence as “partners” is predicated on their loyalty and submission to the wishes of the Stephens clan.

Even before the purchase of the 16 newspapers from the New York Times Co., Warren Stephens, through his ownership of Stephens Media, claimed a substantial presence in media, owning newspapers, book publishing houses, news bureaus, trade magazines and digital ventures. Stephens Media publishes newspapers in Arkansas, Hawaii, Iowa, Missouri, Nevada, North Carolina, Oklahoma, Tennessee, Texas and Washington. Some of the properties are sizeable and influential in their markets, such as the Las Vegas Review-Journal, the Hawaii Tribune-Herald and the Ames Tribune. Today, the total stands at 98 publications.

Halifax Media Group

Halifax Media Group was formed in 2010 from four entities: Stephens Capital Partners of Little Rock, JAARSSS Media, LLC of Miramar Beach, Fla. and Redding Investments of Daytona Beach. Its first acquisition was the purchase of the Daytona Beach News-Journal for $20 million. (The paper, at one time, had been estimated to be worth $300 million.) Michael Redding, former Classifieds Department Manager of the News-Journal, was named CEO of Halifax Media.
Stephens Capital Partners is controlled by Warren Stephens. JAARSSS is owned by Rupert E. Phillips, via Phillips Financial Group, LLC. Phillips has had a presence in small newspaper publishing in Arkansas and Florida, but he became notorious through his involvement in a 1999 Honolulu newspaper legal dispute that pitted local institutions and civic leaders against Phillips and the Gannett newspaper chain.

Phillips, through his company Liberty Newspapers, owned the afternoon daily, the Honolulu Star-Bulletin, which was printed and run from the same office as the morning daily, the Honolulu Advertiser, which was already owned by Gannett. When Phillips tried to sell the Star-Bulletin to Gannett, he was met with a state civil suit and federal charges of anti-trust violations, as filed in U.S. District Court by the then Attorney General of Hawaii. Charges were dropped after a settlement agreement was reached in 2000, allowing for the sale of the Star-Bulletin to Gannett.

According to the Wall Street Journal, Halifax “is shopping for more newspapers.”

Upcoming at the Sun?

There have been no major layoffs at the Gainesville Sun. Yet. The Executive Editor retired, and his position was filled internally. There have been subtle conservative editorial decisions, such as excluding the Doonesbury comics referring to abortion, and some important stories have been buried in the inner pages, but so far no major signs of change in the editorial views of the newspaper have appeared. Only time will tell, perhaps with the upcoming electoral season.

The Gainesville Iguana

The Gainesville Iguana is a semi-monthly progressive newsletter and calendar of events which first began publishing in October 1986. Through its calendar, directory of organizations, and content, it fosters the growth of movement consciousness and community organizing on issues from local to international.